1 Answer
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is causing it those list items to expand... I also noticed that in Chrome, a real browser, none of those sidebar elements are expanding their parent. That means to me that you have one floating element in there somewhere, and the others aren't.

If you use Chrome's developer tools and mouse over the elements inside <span class="expanded"> you'll see that their position is determined to be up top, meaning they aren't flowing properly.

My best advice is to try to look at this not as an IE7 problem but a markup problem in general.